Beazer Mortgage Corp., the mortgage subsidiary of Atlanta-based homebuilder Beazer Homes USA Inc., has seen a substantial reduction in the amount it can borrow via its warehouse line.
According to the September 17th SEC filing, the existing warehouse line has been cut to a mere $17.5 million from $100 million, making it that much more difficult for the struggling homebuilder to finance the homes its builds.
But without a good line of credit, homebuilders will have an awfully hard time dumping mounting inventories, considering they finance the majority of homes they build.
The filing also indicated that Beazer Mortgage Corp. has reduced the number of participating banks under the credit line from eight to one, with Guaranty Bank the sole lender under the facility.
The pricing of the warehouse line remains unchanged, as well as the maturity date of February 8, 2008.
Additionally, the filing noted that the company received waivers of potential defaults relating to their internal audit.
Last month, Beazer delayed its third-quarter results after accounting irregularities forced the company to possibly restate its fiscal results.
And about a week ago, Beazer received default notices from lender U.S. Bank National Association related to $1.4 billion in notes, which the homebuilder said were without merit.
Beazer had sued U.S. Bank National Association in late August in a bid to prevent the bank from putting it into default.
Shares of Beazer Homes USA rose slightly to end the day at $9.47, well below their 52-week high of $48.60 as credit woes continue to extend into the housing market.